July 3, 2012 (Chinavestor) Where is the ceiling for Fushi Copperweld (NASDAQ:FSIN) and Chindex International (NASDAQ:CHDX), investors wonder. Both stocks have advanced too much too fast and as such are ready to take a break. There are no stock extremes other than these two overbought stocks.
New Oriental Education (NYSE:EDU) and Youku.com Inc. (NYSE:YOKU) are considered oversold for their fast track decline. While none of them have reached theoretical lows, the past of decline suggests the worst is over.
The oversold monitor picked up the significant decline of stocks like Sina Corp. (NASDAQ:SINA) and Renren Inc. (NASDAQ:RENN).
Qihoo360 Technologies (NYSE:QIHU) fell hard on Monday amid allegation the company overstated traffic. Despite a 7% plus decline, more downside is possible according to the chart below.
Overbought A technical condition that occurs when prices are considered too high and susceptible to a decline. Overbought conditions can be classified by analyzing the chart pattern or with indicators such as the one above. A sharp advance from $15 to $30 in 2 weeks might lead a technician to believe that a security is overbought. Or, a security is sometimes considered overbought when the stock is trading out of its trading envelope and is approaching the theoretical high. It is important to keep in mind that overbought is not necessarily the same as being bearish. It merely infers that the stock has risen too far too fast and might be due for a pullback.
Oversold A technical condition that occurs when prices are considered too low and ripe for a rally. Oversold conditions can be classified by analyzing the chart pattern or with indicators such as the one above. A sharp decline from $30 to $15 in 2 weeks might lead a technician to believe that a security is oversold. Or, a security is sometimes considered oversold when the stock is trading below its trading envelope and is approaching theoretical lows. It is important to keep in mind that oversold is not necessarily the same as being bullish. It merely infers that the security has fallen too far too fast and may be due for a reaction rally.